MRI 2304

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INTERNATIONAL
SHIPPING BUSINESS

International business consists of

transactions that are devised and carried out
across national borders to satisfy the
objectives of individuals, individuals
companies, group of companies or
government agencies and organizations.

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WHAT IS INTERNATIONAL
BUSINESS?

Gross domestic
product (GDP)

General
Agreement on
Tariffs and Trade
(GATT)

Just-in-time
production (JIT)

North American
Free Trade
Agreement
(NAFTA)

Organisation for
Economic Cooperation and
Development
(OECD)

Offshoring

Outsourcing

United Nations
Conference on
Trade and
Development
(UNCTAD)

World Trade
Organization
(WTO)

Economies of
scale

European
Conference of
Ministers of
Transport (ECMT)

Globalization

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KEY ECONOMIC AND

BUSINESS TERMS IN
BRIEF

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THE GLOBALIZATION OF
THE WORLD ECONOMY

Free Flow Of Goods

The result of the treaty known as the General
Agreement on Tariffs and Trade (GATT)

The decreased then enabled firms to view the world as

their market
Also enable firms to base individual production activities
at the optimal location for that activity while serving the
world market from that location

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The Uruguay Rounds (rounds of negotiation) of member

states formed after WW ll further reduced trade barriers
and established the World Trade Organization

Development Of
Communication Information And
Transportation
Global communication have also been enhanced by
developments of satellite, optical fibre, wireless
technology and now the internet and World Wide Web
Negotiation can also be conducted via video
conferencing. Money and all documents required can be
transmitted over the web
Also development in the transportation technology.
commercial jet aircraft, super freighters and
containerization that have simplified greatly shipment of
cargoes of products worldwide

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Development of the microprocessors has enabled the

growth of high powered, low-cost computers

MOST
IMPORTANT
TRANSPORT
CARRY
BILLIONS OF
TONNES OF
GOODS

TANKERS
BULK
CARRIERS
CONTAINER
SHIPS
Trade Routes

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What is shipping?

CONTAINERIZAT Global Cargo

ION
Shipping
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What is shipping
management?
Shipping management means providing a
complete range of integrated marine services
required by the clients for managing their vessels.

Integrated Marine Services

Commercial Management
Technical Ship Management
Crew Management
Port and Terminal Management
Naval Architecture and Marine Engineering
Bunker Services

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Shipping And Climate

Change

The growth of the global merchant fleet according to

type of vessel

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Shipping And Climate

Change

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Of all modes of transportation, ships are

unbeatable in terms of efficiency.

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MODERN SHIPS - Large, Fast

And Highly Specialized
Marine innovations
are:

AUTOMATIO
N

SPECIALIZATI
ON

SIZE

SPEED

DESIG
N

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A shipping specialists.
General Cargo Ships
A large proportion of the goods they
transport are awkwardly-shaped and
bulky, and do not fit into standard
containers.
Their cargo includes heavy goods and
project cargo for major building
projects such as power stations,
offshore installations and mining.
Some pieces of cargo weigh more than
1000 tonnes.

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Cargo Vessel/Ship

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The capacity of the global oil tanker

Oil Tanker
fleet is huge
This makes oil tankers the most
important cargo ships in the global
fleet next to bulk carriers.
Interestingly pollution from tanker
accidents has reduced considerably in
past decades, despite the increased
volumes of oil transported.
This can mainly be traced back to
improvements in shipping technology.

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Oil Tankers

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The total capacity of passenger ships

Cruise
Liner
and cruise ships, accounting for only
one per cent of the global fleet, is
relatively small.
Nonetheless the sector is booming and
has become a lucrative and growing
business for tour companies.
Despite the economic crisis the major
shipyards are continuing to build
bigger and increasingly elaborate
ships.

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Bulk carriers, like oil tankers (huge

Bulk Carriers
capacity)
These ships transport goods such as
ores, coal and cereals.
The principal routes for ore shipments
are from South America to Europe and
Japan as well as from Australia to
Japan.
The major shipping routes for coal are
from the major exporters of Australia
and South Africa to Western Europe
and Japan.

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Container
The container
shipping Ship
industry has
grown considerably in importance over
past decades.
Standard container sizes have led to
significant savings of time spent on
unloading and transferring cargo to
trucks and rail.
In terms of capacity per ship, container
ships left general cargo ships behind
long ago.

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Container Vessel/Ship

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A cargo is instructed to carry containers

for
20 or 40 footers, and the delivery
involved
is part of International Business

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OCEAN
SHIPPIN
G
GENERA
L CARGO

LIQUID
CARGO
DRY
CARGO
VESSELS

CRUDE
OIL
CARGO
BULK
GOODS
BULK
MATERIA
LS

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WHAT SHIPS CARRY?

Oil, Containers, and Dry Cargo

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Advantages of shipping

Shipping is the most efficient, secure and

safe means of transporting more than 90
percent of global trade.
For vast majority of cargoes like fuel, food,
component parts, commodities and finished
goods there is simply no viable alternative
other than shipping.

Shipping is the least environmentally

damaging form of commercial transport while
taking into consideration the productive value
of the activity.

Advantages of shipping
Any form of transport other than shipping to
move some 90 percent of global trade
would be unthinkably high while taking into
consideration both the economic and
environmental costs.
Shipping is a very positive force for
sustainable development. The imports and
exports that generate global trade are all
carried by sea and developing countries like
Bangladesh can, and do, become major
participants in the industry itself, generating
income and creating wealth in the process.

Disadvantages of shipping
Ships can create serious environmental issues
such as oil pollution or marine pollution either
through accidents or poor operating practices
by dumping wastes at sea or using harmful
paints or coatings on ships hulls.
Even though ships produce less CO2
emissions compared to airfreight or other
transports, still regulations and capacitybuilding measures need to be developed and
implemented to reduce the emission.
Otherwise shipping might pose threats to the
global environment.
Leakages of oil, noxious liquid substances or
garbage thrown to the sea water might

THE KEY SHIPPING ROUTES

Europe
and East
Asia

Japan
Shanghai
Singapore
Hong Kong
United
States

East
Coast of
the
United
States

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There is a relatively small number of principal

transport routes:

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THE KEY SHIPPING

ROUTES
Straits of Dover, Gibraltar, Malacca, Lombok and
Hormuz, and the Cape of Good Hope at the southern
tip of Africa.

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Bottlenecks

Traffic builds up in these areas, making

ships vulnerable to attack by pirates.
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Implications For The Globalization

Of Production And Markets
Communication technologies have enabled Hewlett
Packard to increase integration of its globally dispersed
operations and to reduce the time needed for developing
new products
Internet and WWW has created global electronic market
places for diverse products
Transportation technologies has reduced the cultural
distance between countries and has brought about the
converge of consumer taste and preferences
At the same time, global communication and global
media are creating a worldwide culture

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Technological innovations had made possible for firms to

manage a globally dispersed production system

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Conclusion
Shipping has begun a new revolution from
the late 16th century. At the beginning people
used to deliver goods by roads, using horse
carts or trailers pulled by tractors. Then
gradually people started building
ships/vessels for transporting goods across
the world and later on built airplanes. Now
shipping has become a very positive force
making a major contribution to global
prosperity in a way that has relatively small
negative impact on the global environment
while comparing to other forms of
transportation of global trade. The imports
and exports that generate global trade are all
carried by sea and even the poor and rich
countries can benefit from seaborne trade by
generating income and creating wealth in the

1. Defines International Business

and describe why it is important
to learn?
2. Describe what makes sea
shipping is the safest shipping
mode?
3. State two (2) reasons why
shipping is a global business
today?
4. Describe briefly three (3)

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QUESTION

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